Dutch Supreme Court: restraint required for deviation from contractual termination clause in long-term agreements
When a long-term partnership is suddenly terminated, the impact on the other party can be substantial. Entire business models may revolve around a single major client. Therefore, it is no surprise that the question of whether and how a long-term agreement may be terminated is a frequent source of litigation.
On 16 May 2025, the Dutch Supreme Court (ECLI:NL:HR:2025:763) ruled on the admissibility of a contractual termination clause. This blog summarises that decision and highlights its implications for contractual practice.
A continuing performance contract governs ongoing or repeated performances between parties. Examples include distribution, cooperation, or transport agreements. These relationships are often open-ended and do not always contain detailed termination clauses.
In earlier case law, where parties had no termination clause in place, the Supreme Court held that such contracts may in principle be terminated, provided that certain requirements are met, such as:
- a sufficiently compelling reason for termination; and/or
- compliance with a reasonable notice period; and/or
- payment of compensation.
But what if the parties have agreed on a termination clause with a notice provision? What if the contract clearly says that termination is possible upon giving a ‘one month’s notice,’ but after years of cooperation that feels far too short? Can the court simply extend the notice period?
The case: DPD and Get Moving
Parcel delivery company DPD had a framework agreement with two transport companies (together “Get Moving”). The agreement included a termination clause with a one-month notice period. After ten years of cooperation, DPD invoked this provision to terminate the agreement.
Get Moving argued that the termination came as a shock. Over the years, it had become highly dependent on DPD, had structured its operations accordingly, and claimed that a longer notice period was appropriate. Get Moving sought damages as well.
First instance: contractual certainty prevails
The court dismissed the claim. The contractual arrangement was clear: one month’s notice. If the collaboration had intensified, it was up to Get Moving to renegotiate. The dependence on DPD – created by Get Moving – was insufficient to deviate from the agreed provision. Applying the clause was not “unacceptable according to standards of reasonableness and fairness” (art. 6:248(2) DCC)).
Court of Appeal: contractual gap to be filled
The Court of Appeal took a different approach. The Court of Appeal reasoned that the agreement was silent on how to deal with the consequences of intensified cooperation and increased dependency, and therefore needed to be supplemented. In other words, it ruled that the agreement contained a “gap”. The Court of Appeal “filled” this gap via the supplementary effect of reasonableness and fairness (art. 6:248(1) DCC) and concluded that DPD should have given a longer notice period. By failing to do so, DPD had breached its contractual obligations and was liable.
Supreme Court: no light-hearted replacement of the notice period
The Supreme Court overturned the Court of Appeal’s judgment. It ruled that the Court of Appeal had effectively replaced the agreed notice period. That is only permissible if applying the agreed period would be unacceptable under art. 6:248(2) DCC – which was not the case here. There was no genuine contractual gap that needed to be filled.
However, the Supreme Court acknowledged that a party may, even while observing the agreed notice period, still be liable for damages. This involves supplementing the contract, not replacing the provision – for example, by imposing a duty to compensate if the clause does not address that issue.
The Supreme Court draws a clear line: deviation from an agreed termination provision is only allowed if its application is unacceptable according to standards of reasonableness and fairness (art. 6:248(2) DCC) or in case of unforeseen circumstances. Supplementation of the agreement is possible, but only outside the scope of the clause – e.g., by imposing an additional compensation obligation, not by extending the notice period itself.
Practical lesson: renegotiate in time
Long-term collaborations evolve and dependencies may grow. If contractual terms are not reviewed and amended in time, a party risks being left in a weak position in a dispute. Don’t wait until termination looms. Build in review moments during the relationship, and if the cooperation intensifies, revisit the notice period and compensation provisions while both parties still have bargaining power.